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Market Update

Stocks Advance on Wall Street, Calpers Decides Divest Hedge Funds Investments

Author: Nichole Harper
Last Update: 1:02 PM ET September 16 2014

1:05 PM New York – Stocks on Wall Street advanced market indexes rebounded ahead of Fed policy statement tomorrow. The California Public Employees’ Retirement System decided to divest its entire $4 billion or 1.3% of total investment asset in hedge funds.

Stocks on Wall Street extended gains as investors are expecting Fed keep low interest and stay the course in trimming the bond purchase program as announced.

The Fed policy makers began two-day meeting today and are scheduled to issue a statement tomorrow. Investors are anticipating Fed’s view on interest rate outlook and indication of when rates are likely to rise and the pace of increase.

Tollbooth Index gained 0.4% or 41.10 to 9,452.90.

S&P 500 index increased 11.95 or 0.6% to 1,996.12 and the Nasdaq Composite Index rose 0.4% or 16.89 to 4,535.90.

The California Public Employees’ Retirement System decided to divest its entire $4 billion investment in hedge funds as returns lag. The pension fund’s market value reached $300 billion at the end of fiscal year ending in June.

The public pension fund said in a statement that it couldn’t expand program enough to justify costs and returns of selected funds have lagged market returns.

The California State Pension fund has set annual return target of 7.5% and hedge funds in the program has generated annual return over the last ten years of 4.8%.

Hedge fund industry has amassed $2.8 trillion in assets as institutional investors have increased allocation to alternative investments, according to a report by McKinsey & Co.

U.S. Movers

Apple Inc (AAPL) slumped 1.9% or $1.97 to $99.64 after Chinese newspapers reported the company did not finalized the agreements with the government that can permit iPhone 6 sale in China before the end of this year.

Yesterday the company said preorders for iPhone 6 and 6 Plus crossed four million on the first day, exceeding expectations. The phones will be available in stores starting Friday, September 19.

Humana Inc (HUM) climbed 2.7% or $3.48 to $131.14 after the health care company plans for share buyback of about $2 billion.

The new authorization replaced the previous program of $1 billion share repurchase.

European Markets

In London trading, FTSE 100 index fell 0.3% or 19.98 to 6,784.23 and in Frankfurt the DAX index dropped 0.5% or 45.27 to 9,614.36.

In Paris, CAC 40 index declined 0.6% or 28.02 to 4,400.61.

The U.K. based online apparel retailer ASOS plunged after issuing third profit warning.

Lafarge, France based cement maker divested its Russia-based cement plant to Buzzi Unicem for €104 million and complete its merger with the Switzerland based Holcim.

France based wireless telecom carrier Orange offered €3.4 billion to Spain-based broadband and fixed line carrier Jazztel.

Asian Markets

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc